Charles River upgraded to Outperform from In Line at Evercore ISI
Evercore ISI upgraded Charles River (CRL) to Outperform from In Line with a price target of $170, up from $135, following Q1 earnings and the cooperation agreement with Elliott. Reasons for the upgrade following today's print include the fact that bookings reaccelerated quarter-over-quarter for the first time since 2022, updated disclosure on NAMs after last month's FDA recommendation to shift away from animal-based testing for mAbs, the company's 'enviable market position as a key preclinical development partner' and valuation, the analyst tells investors.
Protect Your Portfolio Against Market Uncertainty
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
3 hours ago
- Bloomberg
Bloomberg Businessweek Daily: Trump Touts China Deal
Watch Bloomberg Businessweek Daily LIVE every day on YouTube: President Donald Trump said a trade framework with China has been completed, with Beijing supplying rare earths and magnets 'UP FRONT' and the US allowing Chinese students into its colleges and universities. The US and China will maintain tariffs at their current, lower levels following the two nations' agreement this week in London, Trump said Wednesday. That number is still higher than before the president took office. Trump said Chinese President Xi Jinping and he must still formally sign off on the agreement. 'OUR DEAL WITH CHINA IS DONE, SUBJECT TO FINAL APPROVAL WITH PRESIDENT XI AND ME,' Trump posted on social media. 'WE ARE GETTING A TOTAL OF 55% TARIFFS, CHINA IS GETTING 10%. RELATIONSHIP IS EXCELLENT!' Yet after months of tense back-and-forth between Washington and Beijing, it remained unclear if the latest round of negotiations brought the two sides closer to an ultimate understanding on trade — or if it just amounted to more talk. 'Trump is mentioning the current tariff status, in a misleading way, to show he has the upper hand,' said Neo Wang, lead China macro analyst at Evercore ISI. Trump's comments prompted fresh questions about the terms of the pact US and Chinese negotiators reached Tuesday. Markets had a mixed reaction on Wednesday to comments from Trump and his team, with US equity indexes fluctuating throughout the day. Today's show features: Bloomberg Economic Chief Geoeconomics Analyst Jennifer Welch on progress in in US-China trade negotiations Alex Grassino, Global Chief Economist for Manulife Investment Management on investment options in the current economic environment Julia Coronado, Founder and President of MacroPolicy Perspectives on the US economic outlook, and expectations for US monetary policy Bloomberg Businessweek Editor Brad Stone on the LA riots and his feature story on the United States losing its moral authority across the globe
Yahoo
9 hours ago
- Yahoo
CRL Q1 Earnings Call: Regulatory Changes and Market Stabilization Shape Outlook
Lab services company Charles River Laboratories (NYSE:CRL) reported Q1 CY2025 results exceeding the market's revenue expectations , but sales fell by 2.7% year on year to $984.2 million. Its non-GAAP profit of $2.34 per share was 12.8% above analysts' consensus estimates. Is now the time to buy CRL? Find out in our full research report (it's free). Revenue: $984.2 million vs analyst estimates of $941.3 million (2.7% year-on-year decline, 4.6% beat) Adjusted EPS: $2.34 vs analyst estimates of $2.07 (12.8% beat) Management raised its full-year Adjusted EPS guidance to $9.55 at the midpoint, a 2.1% increase Operating Margin: 7.6%, down from 12.5% in the same quarter last year Organic Revenue fell 1.8% year on year (-3.3% in the same quarter last year) Market Capitalization: $7.42 billion Charles River Laboratories' first quarter results reflected a period of stabilization amid shifting regulatory and market dynamics. Management attributed performance to stronger-than-expected demand in the Drug Discovery and Safety Assessment (DSA) segment, particularly from global biopharmaceutical clients seeking quicker study starts. CEO Jim Foster emphasized the company's ongoing adaptation to regulatory developments, notably the FDA's push for New Approach Methods (NAMs) to reduce animal testing in preclinical research. Segment performance was mixed, with resilience in research models and manufacturing partially offset by declines in certain specialty areas. The leadership team acknowledged that industry headwinds, such as government funding cuts and persistent uncertainties in biotech funding, continue to weigh on near-term visibility. CFO Flavia Pease credited cost-saving initiatives and improved study mix for supporting operating margins despite the revenue decline. Looking ahead, Charles River Laboratories' outlook is shaped by cautious optimism regarding market stabilization and the gradual adoption of alternative testing methods. Management raised its full-year adjusted EPS guidance, citing improved DSA bookings and a more favorable study mix, but remains wary of potential headwinds. CEO Jim Foster explained, 'We are modestly increasing our full-year revenue guidance for the DSA segment based on improved bookings, though we are not assuming this trend will persist into the second half.' The company is closely monitoring regulatory changes, particularly the FDA's evolving stance on NAMs, as well as broader factors such as NIH funding and tariffs. Strategic investments in non-animal platforms and continued cost discipline are expected to be key contributors to future performance. Management linked the quarter's outperformance to a rebound in DSA bookings, cost savings from restructuring, and incremental progress in alternative testing methods. The company also highlighted the impact of regulatory changes and evolving client demand on its business mix. DSA bookings rebound: The DSA segment saw its net book-to-bill ratio rise above 1x for the first time in over two years, driven by improved bookings from global biopharma clients and fewer cancellations across all customer segments. Management noted that much of this activity was due to studies with faster start dates, reflecting a shift toward shorter-term project commitments. NAMs and regulatory alignment: CEO Jim Foster addressed the FDA's recent push towards New Approach Methods (NAMs), which aim to reduce animal testing in drug development. While acknowledging the gradual nature of this shift, management emphasized Charles River Laboratories' investments in NAMs platforms, such as organ-on-a-chip and in silico (computer-based) modeling, and reported approximately $200 million in annual DSA revenue from NAMs-related services. Segment-specific headwinds: The Research Models and Services (RMS) segment experienced a modest decline, primarily attributed to the timing of non-human primate (NHP) shipments in China and weaker Cell Solutions revenue. Academic and government clients presented a potential risk due to proposed NIH budget cuts, though no immediate impact was observed in the quarter. Manufacturing dynamics: Manufacturing revenue was flat year over year, with growth in Microbial Solutions offset by lower commercial revenue in the Cell and Gene Therapy CDMO business. Biologics Testing volumes started the year slowly, but management expressed confidence in a rebound as the year progresses, citing strong booking activity. Cost management and board changes: Ongoing restructuring and cost-saving initiatives contributed to operating margin stability. The company announced new board members and a strategic review in collaboration with Elliott Investment Management, aiming to identify value creation opportunities and optimize capital allocation. Management's outlook for the remainder of the year hinges on sustained DSA momentum, regulatory adaptation, and prudent cost controls, with caution around funding and regulatory shifts. Evolving regulatory landscape: The FDA's initiative to accelerate NAMs adoption will influence both client demand and Charles River Laboratories' service mix. Management believes broader adoption of NAMs will be gradual and expects hybrid models (combining NAMs with animal studies) to become more common, especially in monoclonal antibody research. Market stabilization and client mix: Leadership anticipates continued stabilization in demand from small and midsized biotech clients, despite ongoing funding challenges. However, the company remains cautious about potential pullbacks in academic and government spending if NIH budget cuts materialize later in the year or in 2026. Cost discipline and operational efficiency: Continued focus on cost-saving measures and restructuring is expected to help maintain margins. Management projects durable savings from recent initiatives while balancing investment in new capabilities and preparation for possible market headwinds. In the coming quarters, the StockStory team will track (1) whether DSA bookings and net book-to-bill ratios remain above 1x, (2) the pace of NAMs adoption and its impact on both revenue mix and client study designs, and (3) any signs of reduced spending from academic and government clients if NIH funding changes take effect. Additional attention will be given to the outcomes of the board's strategic review and progress in Manufacturing segment recovery. Charles River Laboratories currently trades at a forward P/E ratio of 15.8×. Should you double down or take your chips? The answer lies in our full research report (it's free). Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
Yahoo
a day ago
- Yahoo
'So bad, it's good': History shows the market's smallest stocks may be poised for a rebound after record underperformance
Small-cap stocks look poised for a rebound this month after tariff-related losses. Historically, June sees strong small-cap performance due to FTSE Russell index rebalancing. Cheap valuations, potential rate cuts, and AI adoption could drive a small-cap resurgence. Small-cap stocks were hammered in the aftermath of President Donald Trump's tariffs, but the stage looks set for a rebound this June. The small-cap track record has been grim recently: the Russell 2000 has seen its worst streak of underperformance relative to the S&P 500 since the dot-com era, and this past May marked the sixth-worst year-to-date performance since 1990. Small caps, initially perceived as a clear winner of the Trump trade following the election, have emerged as the biggest losers of the trade war. With tariff concerns top-of-mind, investors are viewing small caps as "price takers, not price makers," extra vulnerable to inflation and supply chain disruptions, a note by Evercore ISI senior managing direction, Julian Emanuel, said. But for the optimists, once you hit rock bottom, the only direction to go is up. In the eyes of Evercore, small caps have become "so bad, they're good." June has historically been a strong month for small caps, as the FTSE Russell rebalances its indexes and adds or removes stocks based on market cap criteria. This leads to a surge of trading activity that can boost stock prices. This effect is particularly prominent in the wake of outsized underperformance. In the five other instances of disappointing January to May performance, small caps exhibited strong seasonal reversion during the month of June, outperforming large caps by an average of 4.1%, Evercore said. The firm believes the market has moved past the point of peak tariff uncertainty, which could further boost the sector's performance in June. There are other catalysts for a small-cap resurgence as well. Amy Zhang, a portfolio manager at investment management firm Alger, pointed to cheap valuations and the potential for rate cuts. Small caps have historically traded at a 27% premium relative to large caps due to their higher growth expectations, but on a forward-looking basis, the Russell 2000 is currently only trading at a 11% premium to the S&P 500. This allows investors to get exposure to small caps at a steep discount relative to history, especially as fundamentals and the overall economic environment improve. Cheap valuations make small caps appealing takeover targets, and a pickup in M&A activity could help lift the group, Zhang told Business Insider. As large companies look to boost growth through acquisitions, smaller firms become prime candidates. The healthcare sector, the largest component of the Russell 2000, tends to benefit the most from increased dealmaking, according to Bank of America. Both Emanuel and Zhang believe lower rates, which help smaller companies with higher levels of debt on their balance sheets, could be coming later this year. "Because it's data dependent, they run the risk of being too late again," Zhang said of the Fed cutting rates. "I think it could be the case, like last year Q4, where the Fed may be in a position again to pivot to 50 basis points of cuts." Additionally, Zhang sees AI as a long-term tailwind for small caps. "AI is very deflationary, especially for labor costs," Zhang said. That means companies that adopt AI effectively can expand margins and boost productivity — advantages that could be especially powerful for smaller firms with with smaller budgets. Read the original article on Business Insider
